Skye1013 wrote:Might just be the grammar (or lack thereof) that is losing me.

The Federal Reserve has started their 3rd round of "legalized counterfeiting" of U.S. currency - printing billions of dollars (face value) of worthless bills in order to buy up mortgage bonds in an attempt to (re-)kick-start the economy.

Quantitative Easing = QE; we're now on our third round of QE with the first two having done little for the economy

packaged securities = portfolios of assets bundled together and sold in the market place as one big bond issuance; assets can include credit card debt, auto loans, student loans, residential loans, commercial real estate loans, (think anything with term with a defined payment schedule)

the fringe = Generally Wall Street/high finance firms as they're the only ones selling packaged securities. The hope is that QE frees up capital that has been otherwise held against the securities that have been marked down due to "mark to market" accounting. This will let financial firms recoup the notional value of the debt which frees up the capital being held against it as well which would then be re-invested back into the economy. Basically, it's a giant liquidity event for the firms holding the securities, ie they get paid 100 cents on an asset that was marked down at something significantly less than 100 cents.

without limit = This is the first time that the Reserve has said they will continue to do this until they find the job situation to be acceptable. In previous versions of QE, the Fed stated how much they were going to inject into the market. Now, they're pushing that a side and saying they're going to do it until they're satisfied with the outcome.

Understanding nomenclature is half the battle when it comes to finance talk.

Basically, the whole QE things is hogwash to me and I work in the financial sector. It's a way of supporting asset prices, which for many sectors, I'd argue are in an asset bubble (overly inflated). Coupled with historically and exceedingly low interest rates, we're putting ourselves in a situation where the de-leveraging that we've been going through over the past 4 years has a chance of repeating itself all over again.

Long and short of it:

The recovery of debt asset prices does not help the overall economy in my opinion.

Fivelives wrote:I had QE explained to me as "printing more money to make people think the dollar is doing fine, when in reality just printing the money actually hurts the value".

Accurate?

It's printing more money but that's not the reason. The fed knows that QE lowers the dollar's value and so they aren't trying to make the dollar look better, they are trying to get cash into the hands of groups who have their cash tied up in assets that they can't unload (mortgage backed securities).

The fed normally tries to increase liquidity by keeping interest rates low, but they've been really low for a really long time (housing bubble anyone?) and so there's not much they can do on that end, so they just "print" more money. In theory it's a little bit different than simply printing money because the distribution is targeted. The fed uses it to buy those assets that companies can't cash out on (at their original value instead of the current value) then the fed is supposed to sell those assets back and wipe out the printed cash to reverse the effects of QE when the economy is healthy and the value of those assets has rebounded.

Right, that's not what I mean by targeted. The Fed wants the money to move, in fact that is the whole purpose. They want those financial institutions to have the liquid cash to be able to invest etc. It's targeted because it's aimed at institutions that have certain types of assets. At the moment it's mortgage backed securities, which hopefully can bounce back in value a bit over time.

Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

This is just an amusement really, but I saw a new Super PAC Ad this weekend supporting Romney that made me laugh hysterically.

It talks about "500,000 jobs lost in manufacturing under Obama", and how "Those same jobs increased in China, and for the first time they are beating us." and that "Romney will get tough with the cheaters in China, unlike Obama".

Now, I'm not weighing in on whether or not this did or didn't happen. I'm weighing in, because of the basis of the ad. Romney? Tough on China? The man who built his fortune running a "Chop Shop" (terrible term, but accurate) on companies? Romney, the man who made his fortune with a company that bought manufacturing businesses, gutted them, and shipped their jobs out of the country?

REALLY!?

I.... Don't believe one word of that.

And then, calling China a Cheater? How did they Cheat? What game were we playing? I just... Cheater? Really? I lol'd really hard and long at that one.

Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.

It's part of the problem in Greece right now, they can't devalue their currency (because it isn't just their currency) in order to try and get out of their rut. Not to say it would fix the economy, but it likely would have slowed the descent.

Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.

Agreed, but its the result of faith in the currency (or lack of), not the amount of units of currency (I have no idea what Zimbabwe calls their currency).

Also the reason the euro has taken a downward spiral - there is less faith in the currency (due to Greece, and to a lesser degree Spain and Italy) - there is a reason that 2 out of 3 germans (according to a study I saw just today) miss the old Deutsch Mark - depsite not having any currency related problems in germany specifically.

Nooska wrote:Actually, printing more money doesn't devalue the money for most currencies (its the resulting loss of faith in the issuer that they can't back up the worth).

It did devalue the currencies back when we had currencies based on gold (or silver - pound sterling, was exactly that - 1lbs of sterling silver). Todays currencies are (almost?) all based on faith and trust, and faith and trust alone - if you say your eggs are woth 1$US, and the rest of us agree that that is a fair valuation of your eggs, the dollar doesn't buy less eggs because more dollar bills are printed - the monetary bills are all basically IOUs issued by the government, that we trade with eachothe r(whethere using actual notes or virtual currency transactions).

But if a country prints up a lot more currency, faith in that currency plummets, and it's not worth as much. It's not like the people of Zimbabwe are all billionaires now.

Agreed, but its the result of faith in the currency (or lack of), not the amount of units of currency (I have no idea what Zimbabwe calls their currency).

Also the reason the euro has taken a downward spiral - there is less faith in the currency (due to Greece, and to a lesser degree Spain and Italy) - there is a reason that 2 out of 3 germans (according to a study I saw just today) miss the old Deutsch Mark - depsite not having any currency related problems in germany specifically.

Germany would be a fool to want the old Deutsche Mark back. They've been reaping the benefits of having a comparatively undervalued currency (the Euro) to base their export bonanza on.

Italy, Spain, and Portugal are in a world of hurt. There are signs of Germany's growth beginning to flag and France is stuck in neutral as M. Francois Hollande is beginning to face reality of his country's financial issues.

The EU can't get out of its own way. Say what you will about US banks, but European banks have been bad at marking down assets and in turn getting rid of them. The stress tests that they've put themselves through are laughable and even then, they continue to fail them. US banks have been shedding assets, both good and bad, to shore up their Tier 1 capital reserves to get ready for Basel requirements. European banks are languishing because they are reluctant to take the bitter pill called de-leveraging. The exception has been Ireland as they've done an admirable job at trying to flush bad debt off their balance sheets.

Look at a Japan and their banking crisis from the 90s. They didn't want to take their lumps and many analysts are pointing to that and connecting it to their anemic growth over the past 20 years.

Bad loans got us into this mess. Not the lack of regulation. The only way to get ourselves out of it is to properly write down the debt, take the losses, and move on. There's a metric ton of capital waiting for European banks to actually begin shedding assets because as we've seen in the US, there are lots of opportunities imbedded in the assets. Until this happens, you're going to have reluctant financial institutions not wanting to take on additional risk in the form of new loans/credit due to the reserves they have to hold against assets that are well below their notional value.

US banks are in a comparatively good spot right now. Outside of Canada's financial institutions, US banks are the strongest of the bunch.

The latest Romney Soundbite to get leaked from a Fundraiser in May is just... How stupid is this man? I mean...

47% of Americans feel like they are a victim that relies on the government?

Or... the part that really got my skin to crawl.

"...who believe that they are entitled to health care, to food, to housing, to you-name-it"

Riiiiiiight. What I hear in that, is that Romnom doesn't care if you are homeless, or if you are dying from a treatable disease, or if you and your family go hungry.

I could rip apart his remarks for days. But I wont. I will just let that last part sit with you. The man running for president does not give two shits for you and your situation. He doesn't want to help those who need it the most.

I find it relatively humorous that Republicans have pushed and pushed for reductions in amounts of income taxes, which they ended up getting, and then they turn around and point the finger and say "Hey, you're not paying!".

Well duh, you pushed that band of income off the table.

It's pretty stupid to think that only one segment of the population gets some kind of benefit from our labrnythian tax code. Everyone up and down the food chain gets some kind of assistance in the form of a credit, tax break, lower tax percentage, etc. I'm not about to get into who benefits more because I think the entire tax code has become an impediment and needs to be reformed badly.

That being said, Romney was pandering to his intended audience. His pandering has now been aired to the general public. It's called politics and it's dirty. It doesn't bother me frankly but I can see where people are upset.

Cogglamp wrote:That being said, Romney was pandering to his intended audience. His pandering has now been aired to the general public. It's called politics and it's dirty.

That's one interpretation, although you could also call it opportunism and being two faced. It's the traditional charge against Romney - that he's actually a centrist, pandering to the right and ready to flip-flop.

Maureen O'Dowd's interpretation in the NY Times is the opposite: that the remarks were so raw, he revealed what he really thought; he's genuinely more entrenched on the right than most suspected.

I suspect there are elements of truth to both - it's surprising what people can come to believe in, when it is in their interest to do so.

But whichever is true, the remarks - and being caught making them - reveal a surprising lack of judgment and self-control.

I can tolerate the right advocating cutting benefits to the poor in the guise of improving incentives, removing dependency and ultimately helping reduce poverty - the "tough love" mantra - although I find the arguments unconvincing. But to say you just don't care about the poor - that there's no love at all - that's what the left have always claimed. It's staggeringly inept to verify it. A Thatcher or Reagan would never make such a blunder. Even George W Bush successfully masked himself in a cloak of "compassionate conservatism".

The rest of the 47% quote - the idiocy of equating non-taxpayers with Democrats; the lumping together of vets, the elderly, the poor etc - I won't even touch upon, except to say it reveals a lack of intelligence and thought. By contrast, Obama seems far too supple and deft to be snared in such crassness.

The other thing about Romney's 47% remarks is that he's said them before. I remember reading a comment by him that his job was not to worry about the people on welfare, because - being on fixed incomes - they would be ok. It was the people with jobs - the middle class - who were at most risk in the economic downturn that he would have to work for.

It wasn't as crudely stated as his supposed "gaffe", but it took me aback. The explicit and public disavowal of concern over the interests of the poor was something I have not heard from any other politician. Here in the UK, even the driest conservative would not say that in public: they would argue their policies are best for the poor. The whole premise of the "trickle down" argument is that you care that it trickles down.

Moral values aside, the remark also seemed remarkably crude and unthinking. The people on welfare are not a permanent socio-economic group - people move in and out of welfare, often due to losing one's job, ill health etc. Helping people get off welfare and back into productive activities should be a priority.